On Wednesday OneConnect announced a blockchain partnership with the subsidiary of Philippines Union Bank’s fintech subsidiary UBX. The aim is to leverage blockchain to provide financial services to micro businesses and SMEs (MSME).
The platform will provide a broad range of solutions, leading with supply chain finance. Others include multi-channel loan applications, credit assessments, loan disbursement and anti-fraud checks. Apart from blockchain skills, OneConnect has the technology for facial recognition, assessing micro-expressions during interviews as well as big data and AI.
The solution is expected to soft launch later in the year with a broader roll out in 2020.
Union Bank is the ninth biggest bank in the Philippines. In February, IBM disclosed it was working with the bank on a trade finance solution for invoice discounting. It’s also been active in using a permissioned version of the Ethereum blockchain to help regional banks in the Philippines to connect to the main backbone. These banks are neither members of the Philippine Clearing House nor SWIFT.
The Philippines Daily Tribune noted that that MSMEs make up 99.5% of businesses in the Philippines and account for 62.9% of employment. But a lack of credit histories and financial statements make it hard for banks to asses the creditworthiness of these MSMEs.
“Based on recent statistics from our central bank, only about 6 percent of total loans in the banking system are invested in MSME,” said UBX president and CEO John Januszczak. “Our goal is to give these MSME the chance to grow their business and succeed.”
OneConnect has a strong track record in this area. In China, it has its “One Enterprise Chain” supply chain finance blockchain which aims to enable large buyers to bring along their SME suppliers. By involving the larger companies and knowing more about the transactions, banks can have greater confidence in funding transactions even if they don’t know that much about the supplier.
The Ping An subsidiary is the technology partner in the Hong Kong Monetary Authority’s eTradeConnect blockchain trade finance platform. It involves a dozen banks including HSBC, Standard Chartered, ANZ, Bank of China and DBS Bank.
More recently Ping An announced that it has implemented OneConnect’s smart legal contract platform to standardize and automate contracts.
In 2018 OneConnect raised $650 million at a post-investment valuation of $7.5 billion. Reuters reported that OneConnect is planning an IPO either in Hong Kong or New York, where it will raise up to $1 billion as early as September.